Wednesday, Mar. 18, 2015

Corporate Bond Market
The focus today is on the FOMC meeting and subsequent press conference at 2:00pm. Consensus seems to be that the market will be looking for Yellen to drop the word 'patience' from her guidance and will react accordingly.  Treasuries are rallying ahead of any announcement with the 10yr last at 2.02%.  US Equity futures down so far with the DJIA Fut -82 and the S&P Fut -8.   Globally equities are mixed as investors continue to weigh weaker than expected economic data against the power of continued central bank stimuli.  Oil touching six year lows at $42.25 as forecasts call for record US stockpiles.  Credit continues to have a tough week, leaking wider again yesterday with sellers outnumbering buyers in terms of secondary inquiry.  The supply picture has slowed but cash is still having trouble finding a bid.  There is still a lot of paper for the market to digest and it feels as if dealer balance sheets are getting a little heavy.  The IG index is opening +¾ at 65½/66.

Not a lot of market-moving credit headlines these days.  The main action is in the names highly correlated to the commodity moves.  Iron ore continues to slide, down another 2.5%, copper and natural gas also lower with oil.  The metals/mining names continue to trade wider on this price action, opening roughly another 5-10bps weaker after a tough session yesterday.   In the primary market we saw deals from Oneok Partners (5yr and 10yr), Washington PG (5yr), Liberty Properties (10yr) and split rated Masco Corp (10yr).  The Masco deal was well received and traded up 0.5 to 0.75 almost immediately.   The Oneok deal also went well, trading -3 to -5 in the secondary.  We aren't expecting any new issue today with the Fed due out.  WTD we are at $8.65bn out of an estimated $23-28bn.  MTD we are at $106bn.

 

Municipal Bond Market
Munis are stronger this morning for the third straight day.  We should see light volume in the secondary this morning as the market waits to hear from the FOMC.  All focus should be on the primary with the pricing of a variety of micro deals (University Maine, Detroit Lakes MN, Clarkstown NY). 30 day supply continues to decline with $8.57bln scheduled compared to $11.5bln yesterday.

PR Benchmark GOs sold off after the commonwealth announced that it will delay its $2.9bln bond sale until May.  Bonds traded as low @ $84.00(9.83%) yesterday after trading as high as $86.625 (9.56%) earlier in the week.  We expect GOs to remain in this range until we receive more news on the deal.    

30 Day visible supply: $8.57bln

Deals we will bidding:
141mln    Douglas County, NE School District     2024-2040    Aa1/AAA
13mln    Gallatin County, TN    2015-2026    Aa3/
39mln    Jefferson County School District, KY    2015-2026    Aa3/AA

 

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